Tenet wins $1B federal lawsuit over outlier payments

Things were looking a bit ugly for Tenet, which was facing a huge potential liability over a suit claiming it deprived thousands of hospitals of their share of Medicare outlier payments. But, now that a federal judge has shot down the lawsuit, it looks like the hospital chain won't have to pay back any money.

The suit alleged Tenet set things up to feather its own nest by more than $1 billion. Those suing said Tenet, along with West Orange, N.J.-based St. Barnabas Health Care System, raised charges in an effort to collect better returns from the federal outlier program. Because CMS apparently has been setting limits on what percentage of DRG payments it will pay back out in outlier money, Tenet and St. Barnabas took money away from competitors directly by overbilling, plaintiffs contended.

The judge, however, rejected that argument, brought by 380-bed Boca Raton (Fla.) Community Hospital. Meanwhile, both Tenet and St. Barnabas settled with the Department of Justice over the allegations, with Tenet agreeing to shell out $788 million and St. Barnabas paying out $265 million.